Local initiatives create new opportunities for international investors
Seeing the Forest and the Trees: Carbon-backed Stablecoins
$CODEX is a plant backed crypto token that is 1:1 backed by large, unique, old growth, or urban heritage trees. It engages individuals in the creation and care of NFTrees and allows for participation for investors in a living, growing asset class.
Ideally, the investments we make grow, and generally they do, albeit with some ups and downs. Climate observers see this pattern reflected in the Keeling Curve, which shows carbon levels rise during winter as plants die and decrease during summer as plants grow, absorbing carbon dioxide through photosynthesis. A biomimic might suggest that we consider aligning our economic wellbeing to the flows of nature; as one might say, nature has the final say. Measurement of CO2 is evidence of biomimicry: our sensors comparable to robotic leafless trees that eat no carbon, produce no oxygen, and require no water. Sir Herbert Read, an English poet and founder of the Institute of Contemporary Arts, suggests that, “Only a people serving an apprenticeship to nature can be trusted with machines”. We heed the call and we seek possibilities, somewhere between the sensors and the trees.
In Vancouver, a team at Cascadia Carbon is applying these principles to cryptocurrency based on the growth of trees. The Carbon Offset Decentralized Exchange (CODEX) uses stablecoin, a type of cryptocurrency with its value tied to a real asset. CODEX tokenizes trees using a “NFTree token protocol,” with their growth and carbon sequestration added to the blockchain as “$CODEX tokens,” where each kilogram of carbon removed creates another token. Carbon sequestration potential is estimated by species of tree and particular identifiers such as diameter and growing conditions.
CODEX tokenizes trees using a “NFTree token protocol,” with their growth and carbon sequestration added to the blockchain as “$CODEX tokens,” where each kilogram of carbon removed creates another token.
Cascadia’s founder, Alex Wick, estimates that an average individual’s lifetime carbon footprint is equivalent to the carbon drawdown of 100 – 500 trees over that time (of course, there is variability). Whereas other cryptocurrencies like Bitcoin are not based in real assets, and generate significant emissions through their energy requirements, Cascadia’s NFTree tokens are based on carbon drawdown through tree photosynthesis. In the future, Cascadia hopes to extend the exchange to include more novel carbon removal efforts like Direct Air Capture from companies like Carbon Engineering, also based in British Columbia. Their near-term product is also coded to enable token generation through zero-emissions activities like commuting by bicycle or driving an electric car. Although unconventional, there is precedent for this approach — renewable energy credits are a common type of carbon offset, but generally they apply at institution-scale, such as solar or wind farms. The novel aspect of this approach is how much the bar is lowered for participation in generating emissions offsets, enabling widespread decentralization of climate action and incentivizing young urban environmentalists to become engaged climate actors.
Whether trees are planted as seedlings or saplings, or are mature, they will continue to generate NFTrees for their owners or stewards (an emerging terminology in the land management space). Investments in trees extend beyond the bank account: trees have numerous co-benefits, such as air purification, oxygenation, wildlife habitat, and localized cooling. If the price of carbon dioxide rises, the value of the tokens will rise as well.
In order to integrate with global carbon markets, atmospheric carbon dioxide removal projects strive to address permanence of the removed carbon. With trees, forest fires and invasive insects are top concerns for so-called “permanence” of stored carbon, and more direct human actions such as logging and land development. These risk factors are built in the Exchange architecture, including the ability for tokens to “burn” in their initial smart contacts. There is always inherent risk, and as a member of the forestry community of the Pacific Northwest, Cascadia is positioned to use the best available knowledge into this biomimetic currency,
The novel aspect of this approach is how much the bar is lowered for participation in generating emissions offsets, enabling widespread decentralization of climate action and incentivizing young urban environmentalists to become engaged climate actors.
Fire doesn’t always mean complete tree death. Forest fires might only burn part of a tree’s bark, but more severe fire may completely char the tree. As climate change continues, our understanding of forest fires will undoubtedly evolve. The foresters developing and piloting the CODEX will keep these developments in their field of view.
Enabling individuals to generate carbon offsets through their own low-emissions practices is a bold step. We do not know if it will work, but in the world of Dogecoin and thousands of coins based on supply-demand dynamics, there might be a culture hungry for a device of Earth protection and economic engagement. From trees that spawn tokens as they grow, to electric vehicles and public transit-riders who generate offsets through their daily commute, this is a bold and unprecedented leap into the future.
Cascadia Carbon is hard at work bringing this work to fruition, with a critical mass bicycle ride to Vancouver Island in September to celebrate the launch of CODEX and the initial partnership with TreeCanada.ca. They are one of what this Author hopes is a growing band of cryptocurrency enthusiasts who also see the importance of protecting nature with every ounce of effort we’ve got.
Regina "Gina" Kline
Founder & Managing Partner, Enable Ventures
October 27 - 12:00 PM EST
Founder & CEO, Acumen
November 3 - 12:00 PM EST
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